Are Skyscrapers Profitable?
"[W]hy do developers bother building skyscrapers?" asks Peter Bill. An examination of the occupancy rates for four of London's newest towers "show it to be a risky game," he says. "Conception to completion can take more than a decade, ensuring the project is blighted by at least one economic downturn. The four towers examined above have yet to make a bean although all should when eventually filled."
“It’s much better to be the second owner of a tower, not the first,” says Digby Flower of Cushman & Wakefield. “The problem is you never know when in the cycle they will be delivered. But the big thing about towers is they have a 100-year lifespan and get reincarnated every 25 years.”
Bill compares the costs versus returns for vertically- and horizontally-oriented large buildings. "So a groundscraper costs £100 million to build and ends up worth £375 million," he concludes. "A skyscraper costs £125 million to build and is then worth £325 million."
"Why build skyscrapers? Lack of land, obviously. But there seems to be some sort of man thing going on here as well, doesn’t there?"